Indian Rupee Hits Two-Month High Against US Dollar

The Indian rupee strengthened for a third consecutive day on September 1, 2026, closing at a nearly two-month high of 94.95 against the US dollar. The currency's rise defied a broader selloff across Asian markets triggered by a global bond rout and a 30-year high in Japanese benchmark bond yields.

Growth was propelled by a 7.8 per cent GDP increase in the April-June quarter and significant portfolio inflows, including MSCI-linked investments. Foreign investors contributed approximately USD 3.1 billion in August, the strongest monthly inflow in 23 months. The Reserve Bank of India supported the currency through dollar-selling interventions via state-run banks and inflows into a state-backed infrastructure fund. The central bank's FX forward book reached a record high of nearly $137 billion in July.

Further gains were capped by a 1.97 per cent rise in Brent crude oil, which reached $92.25 per barrel, and weak domestic equity markets. Analysts indicate that future performance may be pressured by hawkish signals from US Federal Reserve officials and geopolitical tensions between the US and Iran.